Biden SEC Sues Musk Over Twitter Purchase In 11th Hour “Sham”

The US Securities and Exchange Commission (SEC) has sued Elon Musk in connection to his $44 billion purchase of Twitter (now X) in October 2022. 

In a Tuesday press release, the agency claims that by delaying the filing of a beneficial ownership report by 11 days, Musk saved $150 million, or 0.34% on several subsequent tranches of stock he bought before filing the disclosure on April 4, 2022.

According to the agency, Twitter shares surged by 27% after Musk filed the ownership report – by which time he already owned 9% of the company’s shares.

“Investors who sold Twitter common stock during this period did so at artificially low prices and thus suffered substantial economic harm,” reads the complaint.

The agency wants Musk to disgorge any profits he incurred due to the late filing, along with pay a civil fine.

In response, Musk’s attorney, Alex Spiro, told the Epoch Times that Musk did nothing wrong – calling the SEC’s lawsuit a “sham.”

“Today’s action is an admission by the SEC that they cannot bring an actual case,” he said, adding that Musk “has done nothing wrong and everyone sees this sham for what it is.”

As the Epoch Times notes further, Spiro accused the SEC of running a “multi-year campaign of harassment” against Musk and insisted the agency was blowing the alleged late disclosure filing out of proportion, adding that this type of infraction carries a nominal penalty.

The lawsuit is the latest chapter in Musk’s contentious relationship with the SEC. In 2018, the agency sued him for posting on social media that he had “funding secured” to take Tesla private at $420 per share, a claim that was later revealed to be exaggerated. The SEC contended that Musk’s “misleading” post caused Tesla’s stock price to jump by over 6 percent and led to “significant market disruption.” That case was settled with Musk agreeing to pay a $20 million fine and step down as Tesla’s chairman for three years. The settlement did not require Musk to admit to any wrongdoing.

Musk’s “funding secured” post also sparked another lawsuit by a group of Tesla investors, who claimed that it was materially misleading and led them to suffer as much as $12 billion in financial losses. During a three-week trial in the case, Musk’s attorneys argued that he believed his statements about taking Tesla private were truthful, citing discussions with Saudi Arabia’s Public Investment Fund (PIF) as evidence of potential funding. Musk testified that PIF representatives showed strong interest in the deal, which led him to claim that the funding was secured.

“I had no ill motive,” Musk said in court. “My intent was to do the right thing for all shareholders.”

The jury sided with Musk in the case. Jurors delivered a unanimous verdict in February 2023, finding that Musk and Tesla were not liable for misleading investors with the posts. The investors appealed the decision, arguing that the judge gave erroneous instructions to the jurors. The appellate court upheld the jury’s decision, clearing Musk of securities fraud.

The SEC’s current chair, Gary Gensler, plans to step down from his post on Jan. 20, the day President-elect Donald Trump will be inaugurated for a second term.

Meanwhile, SEC Chief Accountant Paul Munter will retire from the agency effective Jan. 25 – making it unclear if the agency will even proceed with its filing against Musk.